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Charles Stanley rides the storm

RESULT: Market uncertainty has hit volume and cut commission income, but fee income continues to grow and the stockbroker and investment manager has maintained the half-year dividend
November 8, 2012

Half-year figures from stockbroker and investment manager Charles Stanley (CAY) were not as bad as the headline figures suggest. Total revenue from fees and commission was barely changed at £59.7m and, after adding back one-off costs, amortisation charges and a £1.4m levy from the Financial Services Compensation Scheme, adjusted pre-tax profits were down a more manageable £1.2m at £5.6m.

IC TIP: Hold at 292p

In the past 12 months, funds under management have increased by 13.9 per cent to £15.6bn, and within this there was a 22.7 per cent rise in funds held under discretionary management to £5.4bn - that's important because discretionary funds generate higher fees than advisory funds. Accordingly, in the core private client division, fee income rose from £26.1m to £28.8m, although the tough trading climate kept a lot of investors away from the market, hitting transaction volumes and shaving commission income by £4m to £20.6m.

However, there was better news on the financial services side, which includes employee benefits and pension administration services. Revenue there rose by 10.3 per cent to a record £6.4m, thanks to an increase in funds under management from £151m to £165m since the end of March.

Broker Peel Hunt is forecasting full-year EPS of 15.6p, rising to 21.5p the year after (19.7p in 2012).

CHARLES STANLEY (CAY)
ORD PRICE:292pMARKET VALUE:£132m
TOUCH:289-295p12-MONTH HIGH:299pLOW: 245p
DIVIDEND YIELD:3.9%PE RATIO:27
NET ASSET VALUE:175p*NET CASH:£34.8m

Half-year to 30 SepPre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20115.158.492.75
20123.406.002.75
% change-34-29-

Ex-div: 14 Nov

Payment: 14 Dec

*Includes intangible assets of £33.9m, or 75p a share